“Sellers Are Willing To Compromise” In Massachusetts
The Massachusetts realtors report the sales for January. “After more than a year of declines, sales volume of detached single-family homes for the month of January was up over 12 percent compared to the same time last year. This is the first time there has been a double digit increase since January 2005. ‘We are encouraged about the way January has started off,’ said MAR President Doug Azarian of Falmouth. ‘As sellers continue to price their homes correctly, we should begin to see demand pick up.’”
“Median sales prices for detached single-family homes declined only 2.4 percent compared to January 2006. Residential properties did stay on the market an average of 142 days in January 2007 compared to an average of 104 days in January 2006.”
The Boston Globe. “The number of single family homes sold in the Bay State last month was 3,304, up 5.1 percent from 3,144 from January 2006, reported the Warren Group. Meanwhile, median prices for single families dropped from $325,000 in January 2006 to $314,000 in January 2007, continuing a trend of declining prices that has been in effect since May, the Warren Group said.”
The Boston Herald. “‘Things may be stabilizing here, but it’s too early to call a turnaround,’ said John Bitner, chief economist at Eastern Bank in Boston. ‘Buyers have been holding off because they’ve been concerned that real estate prices have been coming down, though that maybe has exacerbated the weakness in prices.’ Prices have been declining since May 2006.”
The Telegram. “The condominium market in Worcester County had a rough month, seeing sales drop 22.16 percent, from 176 in January 2006 to 137 last month, The Warren Group said. The median price of a condominium in Worcester County fell 13.32 percent, from $219,200 in January 2006 to $190,000 last month, the data show.”
“‘I think it’s pricing, that sellers are getting used to the idea that houses are not worth as much as before, and they’re willing to compromise,’ said Timothy M. Warren Jr., CEO of The Warren Group.”
“Meanwhile, foreclosure filings jumped more than 100 percent in January, as Massachusetts homeowners struggled to hold onto their homes, ForeclosuresMass.com reported. Some 2,207 foreclosure filings were made in January, or about 110 foreclosure filings every business day, the report said. That is an increase of 105 percent from the same period a year earlier, when 1,076 filings were made.”
“In 2006, lenders filed 19,487 notices against homeowners, surpassing filings made in 1992, during the depths of a recession. The filings ‘are scary,’ said Alan Pasnik, an analyst for Warren Group. ‘They’re essentially double what they were.’”
“The mortgage banking industry has said the primary reason filings are on the rise is an explosion in mortgage volume driven by the housing boom, which pushed home sales to record levels in Massachusetts and nationwide.”
“‘The flood of foreclosures in Massachusetts is not only continuing; it has reached a new high,’ company president Jeremy Shapiro said. ‘The fact we are starting the year with the highest number of foreclosures we’ve ever recorded for a single month is more than significant - it’s ominous.’”
“ForeclosuresMass.com continues to attribute the increase to a ‘perfect storm’ of factors. The pressures put on property owners include rising interest rates over the past few years, an increase in sub-prime and other ‘exotic’ loans, the affect of adjustable rate mortgages, rising home heating costs, substantially increased gasoline prices, and the slumping Massachusetts housing market, which leaves homeowners trapped in houses they cannot afford.”
The Daily News Tribune. “‘People are starting to price their houses right from the beginning, or if they’ve been on the market a while, they are starting to make the appropriate reductions,’ said Jane Evans, Realtor in Waltham.”
“Finding a perfect match between a buyer and a seller is all about positioning—by way of price, but also by what buyers want today.”
“In the recent past, a kitchen renovation was high on buyers’ wish lists. And although it’s still nice to have a kitchen with stainless steel appliances and granite countertops, the ‘wow’ factor has subsided a bit, said Gary Rogers, Realtor in Waltham.”
“Also, sellers may want to be careful with putting a lot of money into a big renovation because it may not mimic the taste of a potential buyer, said Steve Stratford, Realtor in Lexington. ‘Make what you have as presentable as possible,’ Stratford said.”
“People don’t mind putting in new kitchen cabinets now that the housing prices are more palatable, Evans said.”
“In addition to following the buyer trends in the real estate market, some sellers in the recent past have tried to use gimmicks to sweeten their deals, such as offering a flat-screen TV or plane tickets to a tropical destination with the purchase of the property. ‘You’re better off offering cash or home warranties to get buyers’ attentions,’ Evans said.”
“‘Gimmicks don’t work,’ Rogers said. ‘What does work is properly pricing your house, staging it and making it accessible for showings when the buyers want to see it.’”
FMT delayed. Need someone with a good memory
Could this be a replay in the making - circa ‘90-’92 RTC? At that time, the banking regulators swept through and declared several (more than a few) S&Ls insolvent. As I recall, one of the principal causes for being declared insolvent was the “marking to market” of loans. There was not enough cash&equivs to beef up reserves and POOF!
Could this be at play?
Read yesterday on WSJ that bank reserves are at historic lows. Also, I’m not sure if this bank closure got any blog time:
http://pittsburghlive.com/x/pittsburghtrib/news/rss/s_492712.html
As far as a replay of RTC, it is already baked into the souffle.
A few FDIC insured New England banks, and a huge credit union in RI went under in the ‘90/’91 bust.
Interestingly, mMost of the carnage was in the state of New Hampshire. They lost 5 of their major lending institutions to FDIC receivership.
This time it’s the fly-by-night mortgage companies who have been the ones doin’ the shakey deals.
I’m not smart enough to figure out who eats what when these POS operations are no longer in biz to buy-back all the garbage they’ve underwritten and financed.
We are in unchartered waters.
“This time it’s the fly-by-night mortgage companies who have been the ones doin’ the shakey deals”
Well, I’m not so sure. I have been diffing through some regional banks’ recent 10K filings and see disturbing trends in REOs, deliquencies, really high proportion of OptionARMs and very low reserve numbers.
What’s most troubling is that neg-am is booked as current revs and you would have to assume given housing’s declines, many of these loans are way under water. Look at DSL & FED.
AZ_BB
So I assume these banks been holdin’ their portfolio’s in house?
WTF?
Most of the established local and regional banks in my neck of the woods got smart after the last fiasco and mandated
20% equity positions or they wouldn’t do the deals.
For all intensive purposes they skimmed the cream of both P&S and refi’s.
FHA/HUD, VA and the mortgage companies got the rest of the crap.
Interestingly, the independant mortgage broker was a non-existant species in the ‘90/’91 bust.
This debacle is a whole new ballgame IMHO.
The January increase in volume does seem strange. Of course they don’t mention whether the mean price is up or down from a year ago.
From my very limited window on the market, a number of houses that went to escrow in October did not sell by December 31, but did complete the sales by the end of January. In a couple cases I know of it took a lot longer than one month to get the financing done, and sellers extended the sales time out a couple of months to get a sale.
about 110 foreclosure filings every business day
I realize this is the entire state, but when you think about 110 families a day losing their homes, it’s sobering, and it’s going to get worse.
Not that it’s any less sobering, but that’s 110 people who get notices, not necessarily who lose their homes.
When you think about 110 people who have probably been forced to cut back on all non-vital spending, that’s where it starts to affect the local businesses.
Further, how many households are cutting back on spending to avoid ever getting a foreclosure notice? How is that affecting the local restaurant owner and movie theatre?
agreed, for every home that enters foreclosure, here must be at least 2 owners struggling to make the payments eating catfood
“‘Gimmicks don’t work,’ Rogers said. ‘What does work is properly pricing your house…”
Well, it looks like the shine is being erased from the realtor’s spew of the last nine months doesn’t it?
Did he take an advanced course in RE to learn that?
No, I think I he may have had to take the advanced-advanced course.
No, he heard it in tape cassette #2 of a $299.95 + S & H three tape cassette RE starter course.
“Gimmicks don’t work,’ Rogers said….”
You mean like the gimmicks of stating “properly pricing your house” instead of saying “dropping the price”, or “negative appreciation” instead of “depreciation”?
Gimmicks like that? What he meant to say is, “they’re not working …..anymore”.
No, no , no, they can stage it. That always works.
Yes, I saw it on TV.
Who in the hell wants to move to Massachusetts, the state with nothing but declining population and jobs?
Taxachusetts? Not for me…
I would disagree with the ‘Taxachusetts’ label, as taxes are no longer so high compared to other states. Still, there is a lot of government interference in daily life due to activists running the local governments on a volunteer basis.
Also chiming in to say “not fair.” MA has a lower ratio of taxes to per capita income than the majority of states. We do have a higher per capita income, though.
And we spread the pain around better than states that rely on one or two tax sources (e.g. states where property tax funds everything, or personal income tax, or sales tax.)
The “Taxachusetts” moniker made a lot of sense 15 years ago, when there was a tax of 12% on all unearned income, regardless of your overall income level. That tax was finally dropped when enough complained about its anti-senior bias, and/or when all capital fled the state. The tax on all income is now at 5.3%, which is pretty much in the middle of the pack.
four season, ocean, mountains, great schools. yeah ill take nebraska over that any day.
Mountains? i wouldn’t call them that. I guess I was a Mass resident when I first visited Niobrara State Park (along the Nebraska-SoDak border). You’re right, I didn’t move to Nebraska…but the 0.0% rate of SoDak income tax could draw me to Yankton if I didn’t hate winter. Great schools? i don’t know. The egalitarian philosophy in certain Mass towns makes it very difficult for “bright” kids to sit through classes where “tracking” has been rejected. I have more than one friend w/ kids in the system.
I’m not sure whats wrong with an egalitarian view, but what in the world do you mean by “tracking”?
What are you looking for a good hangin?
The whole New England region is a reflection of the stagnation going on in western Europe with a rapidly aging populace; the exportation of traditional light manufacturing jobs; and educated young workers who pack up because the cost of living is so high;
they can never get a foothold on the economic ladder.
However, MAZZ is a world unto itself.
Last night on the evening news it was revealed the state government is so f*cked up, they’ve been paying 2000 state workers with borrowed money. As the news commentatory noted last night-It’s like paying your kid his allowance with cash draws on your credit card.
Just wait until all the boomer public employee pension obligations come due, and the taxpayers find out all of this morass has been funded with smoke and mirrors.
Ya gotta be on dope to buy a house in Mazzholeland.
The pension system is a huge time-bomb. We are going to be Taxachusetts again within 10 years. As for homeownership, it won’t make sense here until we are at year 2000 prices, adjusted for inflation.
No kidding. I got bumped off the voter rolls here in Mazz this year because I failed to complete a “town census” in which the questions appeared to be written by a second grader (IE, Do you want to spend money on dog parks or people parks? with no option for neither.) I didn’t bother objecting due to the pontlessness of voting here in Mazz.
What gets my goat about Mazz is that the population, for all its good, really dosen’t “get it.” If you’ve never left the Commonwealth, if your idea of a great date is going to the “99″ for dinner, if your blood pressure tops out at 180/140 when someone mentions they’d rather live elsewhere, then you are really no different than that redneck South Carolinian whom you’re insulting (oh, wait, New Hampshire has Nascar, not South Carolina).
Another point about Mazz: if you brag about the mountains, the ocean, and the big city all being two hours away by car, that only means one thing: you’re in the middle of freaking nowhere.
The day I leave New England - taking my salary - and my wifes - out of the inbred, blue-neck economy, will honestly be the second greatest day of my life.
I hope y’all Mazzholes enjoy the spending power I have being replaced with a $11.25 “cost of living wage” illegal immigrant.
If y’all Mazzholes would just open your eyes and realize there is more to the world than your little “hub of the universe” non-natives might actually enjoy living here. Instead, we come here, earn a few dollars, discover it stinks, and move, only to be replaced by the next sucker (or, as the population figures have show, being replaced by a margin of error). That isn’t healthy for the economy and it sure isn’t going to help attract the next sucker.
Why would I live in Massachusetts when I can live anywhere in the US, making the same money? The question is, I wouldn’t, and I’m not going to.
If y’all Mazzholes can make sure the door hits me in the arse when I leave, it will definitely help me get out just a little faster. I just hope it doesn’t lock on you.
Can’t blame you for going. I will stick it out for my own reasons, but I doubt most of my kids will.
Cactus ED-
You got it all nailed pretty damn good.
Not a single point I would challenge.
Like you note-the attitudes of the loud talker drones who never left their backyards, and grew arrogant simply by watchin’ their POS house inflate in value 10X is enough to make ya gag.
Its a dead cat bounce. There are people out there that think that it is rational to pay close to 350K for a 1300 sqaure foot ranch that was last updated during WW2. That price drops to 320, and they think: “instant Equity, YAHOOO, I can buy that Range Rover that I deserve as part of the American royalty that owes a house!!!”.
Notice the increase in foreclosures, and I can tell you that new building is as frozen as the north pole right now. There are no new surveys going out, and some engineering companies have laid off everybody except for the answering service, just in case a new job comes in.
what kinda biz are you in ?
I sell to service contractors- it’s ugly
Im in IT, I have family that have a surveying Co. and they are not seeing the volume of calls, jobs that they saw in the last couple of years. They tell me that they have 5 open jobs right now, when last year they had around 25-30. Of course surveying is the first thing that needs to be done before a form A plot plan, or a mortgage plot plan.
http://money.cnn.com/2007/02/28/news/economy/newhome_sales/index.htm?postversion=2007022810
The median price of a new home fell 2.1 percent from a year earlier to $239,800, although that was $400 above the December price level. Median is the point at which half the homes sell for more and half sell for less.
The latest median price is down 6.7 percent from the record high reached in April 2006.
The prices have seen downward pressure from the glut of completed homes on the market available for sale. The report shows a record 175,000 completed homes for sale in January, the eighth straight month that reading has risen to a record level.
The median time it takes a completed home to sell now stands at 4.8 months, the longest wait for builders since July 2001, when the nation was in a recession.
While builders have trimmed the pipeline of new homes under construction and available for sale, the supply of all new homes available for sale stands at 7.7 months, up from a 6.9 month supply in December.
” engineering companies have laid off everybody except for the answering service, just in case a new job comes in.”
LOL.
December was an unusually warm month for MA, we even looked at new houses and saw other people. I bet this is juat a false increase which is t o be replaced by a steeper decline. MA is really overpriced and first time buyers are having exteremly difficult time finding affordable housing in a decent neighborhood. I think even spring will be tough this year as more and more people are listing on top of the existing bloated inventory AND like I wrote in the beginning many people who were planning to buy in spring already bought their homes due to warm December and January. It is weird it is the ned of Feb and we just started getting snow storms and noreasters. This is my 2 cents,.
This is what the MAR guy said too.
I suspect there are a number of folks who are trying to get in before credit tightens. Probably not the biggest factor, given many probably see slightly lower prices and more selection as a green light to go buy a house.
Were I a young couple in Boston right now, I might be tempted to do this.
Identify a community where those with jobs similar to mine have lived in the past. Take my income and multiply by three, counting a spouse’s income at 50% if parenting is coming. And say look — this is what you paid, this is what we can pay. We can’t pay more. If you won’t sell, they we just can’t buy.
If they say OK, they are being realistic. If they say things have changed based on what their neighbor got in 2005, they are not.
You need to count spouse’s income at 0%, because child care costs so much in MA that after taxes you will end up behind with just two kids. If you think you both have jobs that pay enough to end up ahead, forget it - one of you will have to take such a career hit it will be better to ditch the second job altogether.
That’s a great idea. I’ve been tempted to put in an offer or two, but based soley on what I can reasonably afford and having nothing to do with asking price. Tacking this disclaimer onto it almost makes me want to try it.
I tried that with my grandmothers house, being family and all, and got nowhere. They are going to sell the house, as soon as my grandmother passes away, and a house that has been in the family for over a century, is going to be torn down to make way for condos….
That is unfortunate–and not uncommon. I have to wonder how a whole generation of Americans became so market-driven that they would choose a short-term financial gain over the success of their offspring. Blinded by greed…
This is because the vast majority now see a house as an investment much like their stocks and 401K, and not a place to live (comfortably if possible)
A house is an investment precisely because it is a place to live. Your return on investment is shelter - the rent you don’t have to pay. The problem today is that it’s a bad investment yielding 2% of so.
What you really mean is that people see a house as a speculative investment, i.e. one bought solely for capital gains.
I think most sellers these days will ridicule you for being cheap, given you can get an option loan with little or no docs, so of course you can afford their home. In fact, if they do succeed in selling at current market, there is a very good chance the buyer will use such an instrument. I am very interested is seeing affordability enforced by lenders again. At that point all that will be left is what folks can afford.
I think most sellers these days will ridicule you for being cheap, given you can get an option loan with little or no docs, so of course you can afford their home.
What I *CAN* afford is irrelevant, and is none of the seller’s business. One does not get ahead financially by spending the maximum that he can afford. Housing is an expense to be minimized, just like any other expense.
Regarding the ridicule of sellers, I am the buyer and therefore will spend what I choose to spend, and not a penny more. The seller can take it or leave it. This is how markets are supposed to work. As this is a falling market, they ridicule any offer at the risk of their own peril.
We need you in Calif, jbunniii
I live in San Francisco, looking at likely relocation to SoCal this summer. Unsurprisingly given my attitude stated above, I am a renter and will remain so until this thing hits bottom.
Hmm… ’bout 2012 in urban coastal California.
This highlights something that isn’t really discussed as a cause for escalating prices…the impact that two salary incomes have had on the increase in home prices. Granted, this has been happening over a generation, not just the last 5 years, but I would argue that it contributed nonetheless.
Without this added “competition” home prices would be more stable, as would household spending.
It has certainly contributed - as those of us who are single can attest, even a very decent individual income (about $150k/year in California, in my case) didn’t buy anything particularly special before the bubble began, and it won’t buy anything at all now.
…except one of those great $407k Compton houses.
That’s sort of what we did. Multipled my current income by 3, took my $80k in savings and assumed $0 from the spouse and had an offer accepted in a good town last week. We close 3/23. Locked in mortgage yesterday, so shaved about 20 bps over the rates prevailing last Friday. Still, it’s a very expensive proposition. I wish I had enough to pay cash (or at least enough cash = to purchase price -> then I would still get a mortgage and mortgage deduction-until it’s repealed- but have a very nice cash cushion in the bank and sleep much more soundly). Oh well, at least there will be one March sale.
We’ve been house hunting in Mass since October. Even in January didn’t see much traffic. But saw more in February. I think metro Boston residential real estate may have a slight dead cat bounce this spring and then get more moribund in summer and fall.
If sellers will sell for 3X income, and not just to those far wealthier than those who previously lived there (ie. grad school folks in Revere), housing will move. If that happens, its a good thing.
That’s what we tried to do in a way. Thanks to Zillow, we knew what they paid in 1988 (bad timing), and what was selling in 2006-2007 (more bad timing for them). Based solely on purchase price and selling price, it penciled out to an IRR of 2.8 for them during that 19 year hold. Still, it’s close to 60% appreciation over that holding period. But, they way over-paid in ‘88. I think they just wanted out so they could retire someplace with lower cost of living.
Gillsie, I think we have seen your screen-name here before, no? Why didn’t you tell us you were going to defect, and let us all shriek at you not to rush into it? sigh …
Dont buy yet. You are catching a falling knife. There is no reason on earth to buy until late 2008 or later. Save yourself a ton and rent.
In Virginia I’m seeing short sale proposals for $100k less than the loan value - and lenders are considering the offers.
Hey KIA I saw one in PWC listed as a short sale for $385k. The owner bought it for $495k on 4/3/06. I wish I could offer $250k for it, but I bet the bank won’t go for it.
offer 250k the bank will have no choice if your the only bidder… hell offer 200k
imagine if he bought 3/05 the super food fight peak
You CAN offer $250K! What’s the worst the bank’s gonna say, “no”?
Go for it, I personally know folks who bid 50% or less on repossessed yachts and the banks sometimes say yes, banks don’t get offended like “owners” do, so why not?
The bank will say no. At the same time the REO officer will put your info in his contact list.
When the house is listed for a month and no offers come in, the officer will call you and call you and call you. Until you strike a deal. Usually 100% financing with no points because you have so much “equity” in the property. Then they will call you on the next property
I played this game in the 90’s. Banks need cash flow not vacant single family homes.
Well, next door to Massachusetts, in Connecticut, it is so bad they have taken to eating road kill:
:))
http://www.courant.com/news/local/hc-roadkill.artfeb28,0,1839769.story?coll=hc-big-headlines-breaking
“Grant works in Guilford but he lives in New Haven, so sometimes he has a 15-minute drive to beat the competition.
“I’ve got four or five friends who listen to the scanners, so when I get there, that deer’s gone,” he said. “So I’m not the only one picking them off the side of the road.”
“..Joe DesLauries. He’s been on Coventry’s to-call list for years. You can’t beat the price - free - but the results can be a mixed bag. Depending on how a vehicle hits a deer, a good portion of the meat can get bruised. But if the deer dies from a head injury, DesLauries said, you can end up with enough meat to last weeks.”
so he is trying to hit the dear in the head with his car… from what i get.
The problem with deer-car crashes is that the deer are pretty good at causing MAJOR damage to the cars. So, even if you get some free venison out of the experience, you may also be dealing with a hefty repair bill. Or a totaled car.
You kill ‘em, we grill ‘em.
SOYLENT GREEN is the answer.
Exactly what is soylent green?
Soylent Green is People!
Hey, 2022 isn’t that far away now…
eastcoaster
You gotta tell ‘em…You gotta tell ‘em…
http://en.wikipedia.org/wiki/Soylent_Green
Early ’70s movie.
I once heard of this young guy on a field trip in the CT woods near the nuclear plant. Apparently, a deer had wandered through a hole in the fence and become contaminated drinking from a waste pool. Later, that radioactive deer bit the man in the arm. Yup . . . Deerman. He’s not exactly a superhero, he mostly just eats peoples flowers and stands in the middle of the road, but he has on occassion given Lyme disease to jaywalkers.
If you are in Conn be lucky it is only a deer. In Alaska moose are fearless with long legs. They just stand in the road and wait for cars to come and chop block them. 3,000 lbs of fresh meat right through the windshield with little or no damage to the grill; quite dangerous. It would take an RV to hit a moose in the head.
In other news, RE ‘professionals’ handbook has come out with 1001 phrases to describe, redescribe, explain, baffle, confuse, contort and otherwise define a free market. How can people possibly consider themselves helpful, free thinkers or anything but a nusiance with moronic statements. Every day it is one more RE person talking about ‘right pricing’ or putting expectations ‘in line with the market’.
It would be like watching a color comentator for bowling. “What do you think he is going for here on his first ball Bob?”
“Well, Tim, i think his strategy here is to go for all of them……there goes the shot…..oh godness, it swung to the outside….let’s hope he has enough spin to bring it back….yes….Yes…YES…..LOOKING GOOD….YATZEE !!!! HE HIT THE MOOSE….FANTASTIC………..100% financing for EVERYONE!!!!!!!!!!!!!!!!!!!!!!!
Every day it is one more RE person talking about ‘right pricing’
Yesterday I went to an open house. The realtor kept telling me that the sellers were looking for a May closing, provided they got the “right deal”. I pretty much was ignoring him, but when he cornered me on the way out the house, talking about the “right deal” again, I finally bit. “You keep talking about the Right Deal - what do you mean by that?”
(Now all HBBers say together -)
“The sellers don’t want to just GIVE IT AWAY”…!!!!
That remark prompted something really snarky from me. I hadn’t intended to be rude when I entered the darn house.
note to self: stock up on MDMA before attendance at Open Houses.
Jasper, I like your post about the Alaska Moose. All we have to contend with around here are wussy deer. Moose = macho mammal.
MA house sales edged up?
I wonder how many of those ’sales’ were REO transactions?
My understanding is that when a lender repossesses a house that counts as a ’sale’.
Given the huge increase in MA foreclosures it only stands to reason that there would be a corresponding increase in ’sales’.
It would be handy if even one of the 10 newspaper articles trumpeting the increase in January sales had bothered to break out the REO activity.
Just saying…
As some people in here already may know
Rick Shaffer, the otherwise rational real estate lawyer who is the host of the weekend 96.9 FM Boston ‘BEST MONEY SHOW” - has continued to insist that there is absolutely no real estate bubble in the Boston market. He’s been on vacation for several weeks, but over the months has refused to admit any kind of bubble
His reasoning:
1. he claims the 90 -93 bust in the Boston Metro and other nearby New England locales was due to “tax law changes”. I believe he’s referring to the passive loss changes enacted in the 1986 Act - however it seems a stretch to claim that this change in law accounts for most of the hit New England took back in the early 1990’s
2. he points out that Boston has limited land vs lets say certain other areas for example like Vegas where the land is relatively unlimited. Ok some truth to that - but it doesn’t stop a bubble from occurring. Boston prices have already long reflected these restrictions on land - so not sure what he means there
Rick Shaffer generally dispense quite common sense financial advise. However - on this real estate issue - he doesn’t seem to taking into account 2 major differences between 90-93 and the current situation
1. the common practice, once rare, of the buyer have little down on the property - except more borrowed money
2. Adjustable loans including increased use of option (negative amort) loans - which didn’t exist back 15 or so years ago
In other words he seems to not admit that the credit bubble itself could have easily created a real estate bubble
He’s on vacation and s/b back soon - but I don’t think he can stick to his denial much longer
One problem upcoming in Massachusetts is the problem on resales in premium communities (e.g Dover, Lincoln, Weston and 10 to 15 other premium communites generally 15 to 25 miles from Boston downtown) where in the last 5 to 10 years during the boom increasing amounts of builders are putting up huge houses on relatively small (less than one acre) lots
Now these houses when they are all new and shiny, they were able to sell many at 1.5 million plus, but with the (current) older (new house) inventory and (as used houses) in upcoming years, it’s going to be a big problem
The bottom line is these are priced at estate level, however don’t offer estate lots - generally for example at least 2 acres, preferably 3 to 4. Many of these houses were also sold with substandard kitchens (relative to the prices), where the builder would be too cheap to add a 2nd kitchen sink - and generally opted to put the kitchen in a mega-size room with the kitchen shoved in one corner, to keep cabinet costs and granite costs low
Anyone buying these mini-mansions on undersized lots better be ready to take a hit down the road - because they will look bad against the competition when they end up in resale at some point
A house can be added to, however a lot size is fixed, and if you are paying several million dollars for the home, you generally don’t want to be looking into your neighbor’s window